Working Paper: NBER ID: w8727
Authors: George P. Baker; Thomas N. Hubbard
Abstract: Explaining patterns of asset ownership in the economy is a central goal of both organizational economics and industrial organization. We develop a model of asset ownership in trucking, which we test by examining how the adoption of different classes of on-board computers (OBCs) between 1987 and 1997 influenced whether shippers use their own trucks for hauls or contract with for-hire carriers. We find that OBCs' incentive-improving features pushed hauls toward private carriage, but their resource-allocation-improving features pushed them toward for-hire carriage. We conclude that ownership patterns in trucking reflect the importance of both incomplete contracts (Grossman and Hart (1986)) and of job design and measurement issues (Holmstrom and Milgrom (1994)).
Keywords: asset ownership; job design; onboard computers; trucking; organizational economics
JEL Codes: D23; L22; L92
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Adoption of certain types of OBCs (L59) | Increase in shipper ownership of trucks (L92) |
| Adoption of OBCs with enhanced capabilities for real-time communication and location tracking (L96) | Decrease in shipper ownership (G32) |
| Adoption of certain types of OBCs (L59) | Lower agency costs associated with complex job designs (M54) |
| Adoption of OBCs with enhanced capabilities for real-time communication and location tracking (L96) | Increased preference for contracting out by shippers (L99) |